Outcome of Exit Polls in Gujarat among top 5 factors cheering Sensex, Nifty

Frontline indices witnessed a gap-up opening, with the Sensex gaining over 300 points in the first few minutes of trade, while the Nifty managed to reclaim 10,350 mark.

   

The Indian market on Friday cheered the exit poll outcomes for Gujarat and Himachal Pradesh Legislative Assemblies, which predicted a comfortable victory for the ruling Bharatiya Janata Party (BJP).

The positivity in the market is on the back of assurance of a political stability, which is key to passing of important reforms for the economy at the State and Centre levels.

Frontline indices witnessed a gap-up opening, with the Sensex gaining over 350 points intraday in the first few minutes of trade, while the Nifty managed to reclaim 10,350 mark.

Exit Polls suggest victory for BJP

Exit polls released by various news organisations and survey agencies on Thursday revealed that the ruling-Bharatiya Janata Party (BJP) is likely to retain power in Gujarat following the 2017 assembly election.

While most polls suggested that the Congress had improved its tally in north Gujarat, the ruling party continues its dominance in south Gujarat.

In the 2012 assembly polls, the BJP won 115 seats, just short of the two-thirds mark, while the Congress won 61 seats in the 182-member assembly. BJP and Congress had a vote share of 47.90 and 38.90 percent, respectively. Former chief minister Keshubhai Patel's Gujarat Parivartan Party (GPP), which was hoping to dent the BJP, ended up winning only two seats. The party was later merged with the BJP. The Nationalist Congress Party (NCP) and the Janata Dal (United) bagged two and one seat respectively.

Meanwhile, exit polls released by various news organisations and survey agencies on Thursday revealed that the Bharatiya Janata Party (BJP) is set to end Congress' rule in Himachal Pradesh. The poll results also indicated that the BJP would win with a 51 percent vote share in the Himalayan state, while Congress's vote share would be 38 percent. Other candidates will take home the remaining 11 percent votes. The agency said that the final result could be somewhere between plus or minus seven in terms of the seat share and three percent in terms of the vote share.

Technical Breakout

Ahead of the announcement of exit polls on Thursday, the Nifty ended above 10,250, making a Hammer-like pattern on the daily charts.

A Hammer which is a bullish reversal pattern is formed after a decline while Hanging Man is a bearish reversal pattern. In this pattern, market witnesses a significant selloff towards opening but manages to recoup some of the losses and closes near the opening level.

Formation of a bullish candle after two successive bearish candles suggests that market is now factoring in a favourable victory of BJP in the upcoming poll results next week.

For the bullish momentum to continue, experts had suggested that the index has to surpass its crucial resistance level placed around 10,350 levels. In this case, the Nifty has managed to surpass that in the opening tick, setting the course for the market ahead.

Booster from US Fed -- no aggresive rate hikes in 2018

The US Federal Reserve, in its recent policy meeting, announced that there could be no aggressive rate hikes in the following year, leading to some relief among emerging markets.

The US central bank came through on a widely expected interest rate hike on Wednesday following its two-day policy meeting and sharply raised its economic growth forecast for 2018.

In their decision, the central bank policymakers mostly followed the script, though they did indicate that one less hike is on the way for 2019. Two Fed presidents voted against the increase — Charles Evans of Chicago and Neel Kashkari of Minneapolis.

The move will push the target range to 1.25 percent to 1.5 percent. The rate is pegged to a wide variety of debt instruments, such as credit cards and adjustable-rate mortgages. The Fed has persevered in hiking rates gradually, with this week's raise being the third quarter-point move in 2017. Projections for 2018 remained unchanged at three more increases.

Global brokerages betting on macro visibility

On the macro front, market experts are looking forward to improving economic and macro scenario. This, if transpired, would lead to more upward moves on the market going forward.

The Indian division of Credit Suisse sees India’s macro economic visibility improving in 2018. However, the growth prospects for the economy are likely to remain weaker than currently expected, according to Neelkanth Mishra, Managing Director and India Equity Strategist at Credit Suisse. "Structural reforms have weakened visibility on most macroeconomic parameters," Mishra said.

“We have long considered India as a ‘house under renovation’. Structural reforms such as the Good and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC) and the setting up of Real Estate Regulators (RERA) in states while structurally positive, have introduced significant uncertainty around growth, fiscal deficits, inflation, interest rates and banking system health,” he added.

Fundamentally, we are turning a corner in terms of economic and earnings growth, Pramod Gubbi, Head of Equity at Ambit Capital, told CNBC-TV18 in an interview. He expects December quarter earnings to see a pick up on the back of a recovery in environment and a weak base from the last quarter. “In terms of sectors, consumer discretionary and IT could show improvement in terms of growth,” he told the channel. Overall, he expects around 15 percent growth in earning for FY19.

Oil stable on tighter market

After witnessing a sudden spike to USD 65 levels, oil prices seem to have stabilised by now.

Oil markets were stable on Friday as the Forties pipeline outage in the North Sea and the ongoing OPEC-led production cuts supported prices, while rising output from the United States kept crude from rising further.

US West Texas Intermediate (WTI) crude futures were at USD 57.15 a barrel at 9:40 hours IST, up 0.19 percent from their last settlement.

Brent crude futures, the international benchmark for oil prices, were at USD 63.26 a barrel, down 0.08 percent from their last close.

Traders said markets were overall well supported by efforts led by Organization of the Petroleum Exporting Countries (OPEC) and Russia to withhold supply to prop up prices.

MORE WILL UPDATE SOON!!